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Vienna backs payments licence

The Austrian presidency is pushing ahead with plans to grant European payment institutions a licence to compete with banks for card payments, credit transfers, direct debits and other electronic payments in a Single European Payments Area (SEPA).

European Voice

4/19/06, 5:00 PM CET

Updated 4/12/14, 12:29 PM CET

In its compromise proposal, which will be discussed in a working group on Wednesday (26 April), the Austrians have rejected a proposal from the Germans to strip out this licence from a new framework for all payment services.

Instead, Austria backs the Commission’s proposal to include the licence as a way of opening up competition. It gives two options for ensuring that non-banking institutions cannot use cash from payment services to fund their business, either by forcing them to put the money in a separate bank account or by setting a minimum capital requirement similar to that imposed on banks.

Experts say most member states prefer the first option, as minimum capital requirements are seen as too restrictive.

Germany – supported by several other member states including Portugal, Lithuania and Finland – was keen to abandon the proposal for a licence in order to secure faster agreement on the new legal framework (NLF), which was proposed by the European Commission in December. European banks have consistently opposed the licence because it allows payment institutions to compete with their payment services while being subject to less stringent licensing and supervision rules.

Ditching the licence would leave the NLF focusing on the harmonisation of payments and consumer protection rules. While this is not entirely without controversy – banks are still resisting the stipulation that all payments must be delivered to the end account whetever it is in the EU the day after the transaction is initiated – it could see the proposal adopted more quickly.

Banks have warned that failure to get the legal framework adopted could jeopardise their self-imposed deadline to create SEPA by 2008 in the eurozone and by 2010 for the entire EU.

At a hearing on Tuesday (25 April) in the European Parliament’s economic and monetary affairs committee,

MEPs will discuss the future of SEPA with representatives from the European Central Bank, the European Association of Corporate Treasurers and the European Payments Council, which is a group of banks focusing specifically on creating SEPA.

French centre-right MEP Jean-Paul Gauzs, who will present an initial Parliamentary report in early May, has said that he has not made up his mind whether to strip out the competition aspect of the proposal.